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Polish Factoring Demonstrated Resilience in 2023. Slight drop in turnover, but fourth quarter with positive momentum

FINANCEPolish Factoring Demonstrated Resilience in 2023. Slight drop in turnover, but fourth quarter with positive momentum

The Polish factoring industry ended 2023 with a slight decrease in turnover by 2.3 percent. This rate was, however, lower than at the end of the third quarter, when it amounted to 3.3 percent, indicating a slight recovery in the market in the fourth quarter. Companies associated with the Polish Factoring Association (PZF) bought receivables for a total amount of PLN 450 billion. The PZF members served 26.3 thousand firms during this period (6 percent more than last year), which put forwards 26.8 million invoices for purchase (i.e., 12 percent more than last year).

The Polish Factoring Association (PZF) brings together a majority of entities that provide factoring services. It currently has 24 members: 5 commercial banks and 19 specialized companies providing financing in the scope of factoring agreements. The members of PZF financed the Polish firms’ operations for a total of PLN 450 billion in 2024 and the market, thus recorded a moderate decline of 2.3 percent.

“The year 2023 marked a considerable slowdown in the Polish economy. According to preliminary data, economic growth reached only 0.2 percent, the lowest pace in this century, except for the recession in 2020 caused by the pandemic. Inflation reached its highest levels in many years, exceeding 18 percent in the first quarter of 2023, with the average annual price index for goods and services in 2023 reaching as much as 11.4 percent. It is also worth recalling the cycle of interest rate hikes, which translated into high operating costs for Polish companies – a phenomenon painful for everyone using various forms of financing. It seems that the Polish economy is already emerging from the recession, but the improvement is occurring slowly. Undoubtedly, the pace of change is correlated with the situation on foreign markets, particularly in the European Union countries, including our main trading partner, Germany, which has been struggling with economic difficulties for several quarters. These phenomena have a strong impact on the factoring market, especially on international factoring, which was the main culprit of the slight negative dynamics of the sector’s turnover,” says Konrad Klimek, head of PZF’s executive committee.

Currently, 26.3 thousand companies, especially small and medium-sized ones, use the services of companies belonging to PZF. They issued nearly 26.8 million invoices based on which domestic factors provided financing.

“Although we ended the year with a small minus, the fourth quarter already had positive turnover dynamics. In the coming months, we count on the continuation of this trend. The decline in turnover from the third quarter of 2023 we treat as a temporary phenomenon. The number of companies using our services is constantly increasing. Currently, there are over 26 thousand of them, i.e., 6 percent more than last year. Important factors determining the development of our industry were and are: flexible cooperation with customers and possibilities of launching additional safe financing lines for them, such as receivables insurance or guarantees available on the market, and an ability to open up to new markets. Therefore, I assess the 2023 balance positively,” adds Konrad Klimek.

The Polish factoring companies often serve entrepreneurs who issue invoices for large amounts and with long payment terms. These are usually manufacturers and distributors whose maintaining liquidity determines their growth or survival. Factoring allows them to access cash quickly and meet their current obligations. Thanks to this, they can develop their activities without disturbances and offer attractive purchasing conditions to their contractors. This service ensures their good financial condition, stable position, and competitive advantage.

Despite the unstable macroeconomic situation, last year was not easy for the factoring industry. However, despite a decrease in turnover value (-2% YoY), the number of clients served increased by 6% YoY and the number of funded invoices increased by 12% YoY. These data indicate that in challenging times, even small entrepreneurs increasingly decide for factoring, financing invoices for lower amounts but in larger numbers. This is made possible by factoring companies’ efforts to build awareness and offer services to micro and small enterprises. Ongoing digitization and automation facilitate this task, and one can use factoring from any place at any time.

“We notice that those who start using the service during a crisis also benefit from it during stabilization. Factoring is becoming a pragmatic tool that helps in daily management of a company’s finances,” says Łukasz Ramczewski, Vice President of the Board of PragmaGO.

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